In re Sterrenberg (No. 11-08543-8-RDD)

Debtor filed chapter 7 bankruptcy, and on her original B22A Chapter 7 Statement of Current Monthly Income and Means Test included items on line 42, the deduction for secured debts. These included a $1,260 payment on former residence, $202 payment on a boat, and $670 on a car. Separately, the debtor indicated on her Statement of Intention that she intended to surrender her interest in each of these three items.

The Bankruptcy Administrator moved to dismiss the case, asserting that these deductions were improper. At issue was how to interpret the statutory phrase allowing deduction of "the total of all amounts scheduled as contractually due to secured creditors." The debtor maintained that the plan statutory language included debts due, and did not account for choices to surrender.

The Court observed that other court have come to varying conclusions when presented with this aspect of means testing. The Court found that the best interpretation of the statutory language was that once declaring an intent to surrender, the debtor no longer had no longer "scheduled" the debt as contractually due, citing to In re Ray, 362 B.R. 680 (Bankr. D.S.C. 2007). In further support of this reading, the court noted that recent major means testing decisions together "encourage[] courts to apply a more case-specific forward looking approach that takes into account the Debtor's known or virtually certain future income and expenses." The Court disallowed the deductions and granted the motion to dismiss under §707(b)(1).

Chapter 7
Full Text Source:
In re Sterrenberg, No. 11-08543-8-RDD (Bankr. E.D.N.C. May 18, 2012)
Related Terms: 
Case Number: 
Decision Date: 
Friday, May 18th 2012
Court Division: 
Bankr. E.D.N.C.
Randy D. Doub
Google Scholar: 
Primary Holding: 
debtor may not deduct on the chapter 7 means test a debt secured on property the debtor intends to surrender
Share this page:

This case reference and summary is made available for educational and informational purposes only and to promote a general understanding of the law, and not to provide specific legal advice. No representation is made regarding the currentness of the information contained in this post. All readers should conduct independent inquiry into the legal significance of the referenced decision and into the possibility of subsequent conflicting caselaw. Unless otherwise stated, the author(s) of the summary did not represent any parties in the case.